Business Management SL, Unit 4: Marketing | Quizlet

Define a need

Essentials that all humans must have to survive.

Define a want

These are human desires. Humans have infinite wants.

What are the 3 different meanings of a market?

a place where buyers and sellers come together or interact

a location

a type of product

Explain a market as a place where buyers and sellers come together

A market is any PLACE, physical or virtual, where BUYERS AND SELLERS come together to EXCHANGE goods. In addition to open air markets and physical shops, virtual marketplaces such as eBay, & stock markets.

Explain a market as a location

A GEOGRAPHICAL area where a business SELLS its products or services, like a local or international market.

Explain a market as a type of product

A CATEGORY of products or services with DEMAND, such as the technology market or fashion market.

Define marketing

Is the management process involved in identifying, anticipating and satisfying consumer requirements profitably.

Explain the 4 things marketing involves.

1. Identifying the needs and wants of customers

2. Anticipating & predicting what customers want in the future

3. Considering the price, product, place & promotion

4. Earning a profit

Define the marketing mix

The decisions of a business regarding its product, price, promotion, place, people, processes and physical evidence.

Define business to consumer (B2C)

The process of a business selling products to consumers.

Define market orientation

A marketing APPROACH focused on identifying and meeting CUSTOMER WANTS & NEEDS through market RESEARCH & data analysis

Define product orientation

A marketing APPROACH focused on creating HIGH quality or INNOVATIVE products assuming customers will want them

Define a patent

A licence or grant that gives an inventor the exclusive right to make, use or sell a product for a specific period of time.

See entire glossary

Define market leader

The product or brand with the highest market share.

Advantages of product orientation.(3)

1. USP and assured quality: As product orientated business can distinguish from its competitors by providing high quality.

2. Monopoly power: New products may receive a patent. This would enable the business to be the sole producer for a period of time, resulting in large revenues and profits.

Disadvantages of product orientation.(2)

1. High risk. There may be no customer interest in the product because it was not targeted at an identified need.

2. High costs. Product orientation requires large sums for investment - money that could be used elsewhere in the business on less risky activities.

Define USP or unique selling point.

A feature of the product that distinguishes it from its competitors.

See entire glossary

Advantages of market orientation. 3

1. Low risk: Firm can be confident that their products will sell because its tailored to meet needs and wants of consumers

2. More Social enterprises. These will want to be market oriented in order to meet human needs or to solve problems in society or the environment.

3. Greater flexibility bc u got access to market info so u can respond quick to changes or repeat customers bc ppl need/want product

Disadvantages of market orientation. 2

1. Market research must be right: Poor market research could result in poor product development.

2. No USP. Other companies can carry out the same market research to find appropriate products, so competition may be greater.

Define market share

Refers to an organizations share of the total value of sales within a specific industry.

Market share formula

Sales/Total Market Sales X 100

What is the importance of market share 5

1. Indicator of competitiveness: A higher market share shows how well a company is performing compared to competitors.

2. Economies of scale: More market share often means higher sales volume, leading to lower production costs and higher profits.

3. Brand strength & influence: Companies with large market shares often have stronger brand recognition and customer loyalty.

4. Investment attractiveness: Investors see market share growth as a sign of a company's health and potential for future success.

5. Pricing power: Dominating a market can allow a business to set prices rather than follow competitors.

Ways to increase market share

1. Brand promotion: to develop brand value & loyalty.

2. Product development/innovation/improvement

3. Motivating & training workforce for better customer service

4. Establishing intellectual property rights like the use of trademarks, patents & copyrights.

5. Using more efficiency channels of distribution

Define market growth

Refers to the rate at which the size of a market increases.

Formula for market growth.

(current market size - og market size)/og market size x 100.

What is the Boston Consulting Group (BCG) matrix & the key variables

(BCG) matrix helps businesses with multiple products decide on their marketing strategies.

Key variables: Market share & Market growth.

Purpose of the BCG Matrix Purpose

To help businesses build a diverse product portfolio, ensuring both growth and steady revenue streams.

State the market share & growth for cash cows

High market share.

Low market growth

State the market share & growth for problem child

Low market share.

High market growth.

State the market share & growth for stars

High market share.

High market growth.

State the market share & growth for dogs

Low market share.

Low market growth.

Uses of the BCG Matrix (3)

1. Identifies products with high revenue potential.

2. Helps guide investment and marketing strategies.

3. Encourages flexibility to respond to competition.

Limitations of the BCG Matrix

1. Subjective without clear market data.

2. Doesn't account for external environment or internal strengths/weaknesses.

3. Product categories may change over time.

4. Must be used alongside other analysis tools.

Define marketing objective

Specific marketing goals of an organization

Define Marketing strategies

Medium to long term plan to achieve an organizations marketing objectives.

Describe cash cows (bcg)

Successful in mature & slow growing market.

Have high sale revenue from customer base

High customer loyalty hence less money marketing.

Promotion is on replacement and maintaining loyalty.

Describe dogs (bcg)

These products might be at end of product life cycle or are niche products in low growth market.

Describe stars (bcg)

Revenue is growing strong/ Requires investment to sustain growth. Marketing focuses on attracting new customer. Profitability depends on revenue invested in growth. Possible to have negative cash flow bc growth is more than profit.

Describe problem child.(BCG)

These products are often recently launched in response to the rapidly growing revenues of competitors. If they are to gain market share, considerable investment will be required. Therefore, they are likely to have a negative cash flow.

Define a marketing plan.

A marketing plan is a document outlining a companies marketing process through its objectives and strategies.

Define budget.

A plan that outlines a business' revenue and expenditure over a period of time.

Define market research

Gathering information to support marketing decisions.

See entire glossary

Define marketing mix

The decisions of a business regarding its product, price, promotion, place, people, processes and physical evidence.

Define a marketing audit.

A review of the current position of an organizations marketing mix, in terms of its swot.

What are the 6 elements of the marketing plan.

the marketing objective

the marketing budget

segmentation and the target market

market research

marketing strategies

control tools

From the marketing plan explain the marketing objective

Provides direction for the marketing function to help achieve overall business objectives.

From the marketing plan explain the marketing budget

The money allocated to marketing tasks.

Types of budgets:

Objective-based: Flexible, based on what's needed to meet the goal.

Sales-based: Fixed percentage of company sales revenue.

Incremental-based: Uses the previous year's budget with adjustments for inflation.

From the marketing plan explain the segmentation & the target market

Dividing consumers into groups with similar characteristics and needs.

Purpose: Helps businesses identify the most profitable segments and create strategies to meet their needs.

From the marketing plan explain the market research

Gathering information about consumer needs, tastes, and habits to inform marketing decisions.

Purpose: Identifies new opportunities and supports market-oriented decision-making.

From the marketing plan explain the marketing strategies

Long-term actions to achieve the marketing objective.

Key elements: The 7 Ps - Product, Price, Place, Promotion, People, Processes, Physical evidence.

From the marketing plan explain the control tools.

Tools to assess the success of marketing strategies.

Examples:

Sales revenue and profit data

Number of repeat customers

Surveys and focus groups

: What is Segmentation? Definition:

Segmentation involves splitting a population into GROUPS with similar NEEDS or characteristics to better target marketing messages.

3 types of segmentation.

Geographic: Based on location (country, region, urban/rural).

Demographic: Based on age, gender, occupation, income.

Psychographic: Based on lifestyle, interests, values.

Geographic Segmentation Definition:

Dividing potential customers based on their geographic location.

Region/Continent: Lower marketing costs by targeting multiple countries.

Country: Adapting to different languages and cultures.

State/Region: Distinguishing between geographic or linguistic groups.

Urban/Rural: Recognizing differences in transport, income, and lifestyle.

Demographic Segmentation Definition:

Dividing consumers based on measurable traits like age, gender, and income.

Age: People's tastes change as they grow older (e.g., Millennials, Gen Z).

Gender: Products often targeted by gender, though there is some stereotyping backlash.

Socio-economic group: Based on income, occupation, and education.

Psychographic Segmentation Definition

Dividing the population by lifestyle and personal interests.

Example: Magazines targeted at history, fitness, travel, or cooking enthusiast

Advantages of Segmentation

Identifies gaps and opportunities in the market.

Helps design products for specific groups.

Reduces waste of resources.

Allows diversification and risk spreading.

What is Targeting? Definition:

Selecting the most appropriate segment for a marketing campaign.

Mass market products: Larger segments (e.g., milk, crisps).

Niche markets: Smaller, defined groups (e.g., high-end fashion).

Small companies: Often target niche markets due to limited budgets.

Large companies: Can use above-the-line promotions (TV, radio, social media).

Product Positioning Definition:

Positioning a brand to meet the needs of a selected target market, creating differentiation.

Goal: Limit competition and build customer loyalty.

Define Niche market

A niche market targets a small segment of the population with specialized needs, offering specific products or services.

What is a mass market?

A mass market refers to goods produced in large quantities, targeting a broad audience with undifferentiated products.

What is the difference between a niche market and a mass market?

A niche market targets a small, specialized segment, while a mass market targets a large audience with undifferentiated products.

Advantages of Niche Marketing 2

1. Less competition: Low level of competition leading to high profit margins.

2. Suitable for small businesses: May be attractive to new or small companies who dont have resources to compete in mass.

Disadvantages of Niche Marketing 3

1. High per unit cost. Businesses using niche marketing may not have economies of scale and have higher per unit marketing costs.

2. Less reach. Since goods are produced in small batches, quantities sold are small. If the profit margins are moderate, this will lead to smaller profits.

3. Little growth potential. As the market is specialised, there is less growth potential for businesses.

Advantages of Mass Marketing 2

Large market. Large target market and potentially higher revenues.

Low per unit production and marketing costs. Mass production leads to low per unit costs (economies of scale).

Disadvantages of Mass Marketing 2

1. High cost. To reach a larger number of customers, businesses need to use the more expensive above the line promotion, requiring a higher upfront investment.

2. More competition. Since a mass market product is more difficult to differentiate, businesses will experience more competition.

What does differentiation mean in marketing?

Differentiation refers to highlighting the differences between a product or service and its competitors to make it stand out.

What is a unique selling point (USP)?

A USP is a feature or aspect of a product or brand that makes it distinct from competitors, often adding value and being difficult to replicate.

Why is a USP important for a business?

Without a USP, customers have no clear reason to choose one brand over another, making it essential for market success.

How can a business use product differentiation?

A business can differentiate by creating innovative products or being the first to market with new products, gaining a competitive advantage.

What role do patents play in differentiation?

Patents give exclusive rights to a product, allowing businesses to charge higher prices and recoup their development costs.

What is attribute ownership in product differentiation?

Attribute ownership occurs when a product is associated with a specific attribute, such as a unique function or benefit that sets it apart.

How can a business differentiate by heritage?

A business can use its historical background or long-standing reputation for quality to differentiate its products.

What does it mean to differentiate by design or updates?

Differentiating by design or updates involves refreshing or rebranding a product to make it appear relevant and appealing to consumers.

How do social enterprises differentiate?

Social enterprises differentiate by addressing unmet needs or social issues, offering products or services that align with their mission.

How can a business differentiate through price?

A business can differentiate by offering the lowest price due to economies of scale or by setting a higher price to signal exclusivity or quality.

How can promotion be used as a USP?

Effective promotion can build customer loyalty and differentiate a brand by making it memorable or associating it with specific values or events.

How does shock advertising contribute to differentiation?

Shock advertising grabs attention through provocative or surprising messages, creating a distinct identity for the brand.

How can a business differentiate through place?

A business can differentiate by choosing strategic or unique distribution channels, like having a store in a highly convenient or exclusive location.

How can customer service be a form of differentiation?

Positive and exceptional customer service can lead to repeat business and build strong customer loyalty, differentiating a brand from its competitors.

What is physical evidence in marketing?

Physical evidence refers to the tangible aspects of the business, like store layout or product presentation, that contribute to the overall customer experience.

How can a business differentiate by process?

Differentiation by process involves streamlining or improving internal processes, such as speed of service or ease of transactions, to enhance customer satisfaction.

How can for-profit social enterprises differentiate?

For-profit social enterprises differentiate by aligning their business model with social or ethical values and focusing on specific aspects of the marketing mix.

How can non-profit social enterprises differentiate?

Non-profit social enterprises differentiate by emphasizing their unique mission or social impact, distinguishing themselves from other organizations in the same space.

Advantages of differentiation(3)

- High prices: Firms can charge more bc their products standout unlike mass produced goods with lots of substitutes.

- Strong brand loyalty: Recognizable brands attract more customers and keep them loyal

- Better Distribution: Popular, different products get better shelf space in stores

Disadvantages of differentiation(3)

1. High costs: Creating unique products & marketing them is expensive

2. Less cost efficiency: Mass production is easy and cheap but differentiation requires customization increasing costs.

3. Too many choices can confuse: Too many product variations(excessive differentation) can overwhelm buyers.;

Define market research:

Refers to marketing activities designed to discover the options/believes and preferences of existing and potential customers.

Purpose of market research

1. Giving businesses up to date info as industries r everchanging

2. Help firms tailor their market mixes for specific target segments

3. Help firms understand activities & strategies used by their rivals

4. Asses customer reactions to products

5. Help firms understand trends for future,

What is product based research.

This involves testing a new product in a small market for a limited time to see if it meets customer needs. If successful, the company can launch it fully; if not, adjustments or cancellations may follow.

What is price-based research?

Companies track competitors' pricing strategies in competitive markets. This allows them to adjust their own prices to remain attractive and profitable.

What is promotion-based research?

This research helps companies identify which media channels their target market uses. Choosing the wrong media could waste money and miss potential customers.

What is place-based research?

It focuses on selecting the best distribution channels to reach customers. Insights may come from expert interviews or asking the target market directly.

What is people-based research?

This research ensures that employees offer a positive customer experience. Satisfied customers are more likely to make repeat purchases.

What is process-based research?

It examines how to create efficient processes for delivering a service. Companies often benchmark against competitors to improve speed and quality.

What is physical evidence-based research?

This focuses on the sensory and visual aspects of a customer's experience. For example, supermarkets use 'shelf testing' to find the best product placement.

What 2 areas can market research be broken down to.

primary market research

and

secondary market research

Define primary market research

Involves gathering new and first-hand data for a specific purpose Creating new info thru surveys, interviews etc.

Advantages of primary market research

Relevant: as carried out for specific purpose so it addresses questions that need to be answered in useful way.

Up to date: Tends to be more up to date and secondary research usually old less reliable.

Confidential & Unique: Conducted first hand hence no one else has access including competitor.

Disadvantages of primary market research

1. Time consuming: Can be tedious & length to collect primary data that r accurate. Can delay decision-making & lead to lost opportunity.

2. Costly: Expensive due to time involved to gather sufficiency & meaningful data.

3. Validity: Flaws in market research will lead to misleading and biased results.

What are the 4 primary research methods

Surveys, Interviews, focus groups & Observations